SWITZERLAND - The CHF8.2bn (€5.4bn) pensionskasse for the Swiss canton of Basle City (PKBS) is to receive CHF1.38bn to ensure the pension scheme is fully-funded again.
According to the PKBS' administrative board the region is to put the money into the fund straight away as the pensionskasse is now just 85.7% funded - 10 percentage points below the legal threshold under which funds are required to take measures to increase the funding. (See earlier IPE-story: Expert supports full-funding holiday)
The pension scheme for basle region civil servants and related institutions, such as universities, said it suffered a 10.9% loss on investments in 2008, which amounts to a real loss of CHF1.4bn (€920m) .
The fund's bond and domestic real estate portfolio contributed positively to the return with 5.4% and 4.7% respectively but domestic equities lost 30% and foreign equities fell in value by 46%.
The pensionskasse had been fully-funded at the beginning of 2008 thanks to financial aid of CHF1.5bn.
The canton once again wants to contribute a large sum to top up the scheme anddraw up a plan to work out how companies, fund members and pensioners should contribute to these rescue measures.
The pensionskasse had calculated that it would need an annual minimum return of 6% to become fully-funded again within 10 years, if the fund relied solely on market performance.
These changes to contributions will only be applied to the civil servants' part of the fund, which accounts for over 80% of the debt.
Other institutions which are members of the pensionskasse will have to devise their own plans in order to pay off the money which the canton is contributing.
Active civil servants are expected to help clear 40% of the debt while pensioners and deferred members would take on 60% of the debt, based on the fund's demographic make-up.
The measures include a stop on indexation for both active members and retirees as well as a halt to salary increases for the coming years.
Elsewhere, the pensionskasse for the energy sector PKE has announced its chief executive, Clivia Koch left the fund at the end of April.
Ronald Schnurrenberger, director of KPMG in Zurich, will manage the pensionskasse until the fund can appoint a new CEO.
At the same time, Rolf Ehrensberger will be the new head of the investment division from June 2009, once he leaves his current position as head of credit Europe at Swiss Re in Zurich.